November 14, 2019
Barita Investments Limited (BIL) for the year ended September 30, 2019, reported a 49% increase in Interest income to $1.52 billion relative to $1.02 billion for 2018. Interest expense also recorded an increase to close at $875.36 million compared to $598.18 million in 2018. As a result, net interest income improved 54% to $649.59 million relative to $422.29 million in 2018. Management noted this was, “due to a combination of factors, principally, increased portfolio size owing to our capital raising initiatives together with growth in our on book liabilities.” Net interest income for the quarter closed at $212.68 million, 82% above the $116.59 million reported for the prior year’s corresponding quarter.
Dividend income fell 3% to total $30.67 million compared to the $31.78 million earned in 2018. BIL stated, that, “this decline in dividend income in FY2019 is a consequence of a more active approach to the management of the Group’s euity portfolio which resulted in an increased concentration of revenues in capital gains and reduced reliance on income from dividends.” Gains on sale of investment increased significantly to $1.91 billion (2018: $136.45 million).
Foreign exchange trading and translation amounted to a gain of $190.67 million compared to a gain of $187.95 million recorded for the previous year.
Fees & commissions income rose by 73%, to close at $875.59 million (2018: $505.21 million). BIL noted, “the expansion in fee revenues was primarily driven by continued growth in the Group’s asset management business line as well as a revenue from the newly formed investment banking business line which was launched in December 2018. We intend to support growth in the fee generating areas of the business through the introduction of new asset management products as well as continued focus on the investment banking business.”
Notably, BIL reported other income of $314.39 million for the year relative to $20.99 million in 2018. Management noted, “this segment was reported at $314 million which substantively arose from the recovery of investment losses incurred by the Company in prior periods.” As such, net operating revenue amounted to $3.97 billion relative to $1.30 billion recorded for 2018. Net operating revenue for the fourth quarter amounted to $1.15 billion in contrast to $458.69 million booked for the fourth quarter of 2018.
Administrative Expenses for the year amounted to $857.72 million, increasing 128% from $375.57 million in 2018. Staff costs for the year rose 41% from $385.41 million booked in 2018 to $544.94 million. BIL reported an ‘Impairment/ Expected Credit Loss (ECL)’ of $108.07 million (2018: nil) for the year. Total expenses for the year rose 99% to close at $1.51 billion compared to $760.98 million recorded in 2018. BIL noted, “the increase in operating expenses was largely driven by the continued investment in the Group’s growth initiatives throughout the year in support of the aforementioned revenue growth and diversification efforts. Which were more than offset by the resulting gains. The Company also experienced a related rise in administrative costs associated with increased marketing efforts and facility improvements.” As, such, profit before tax amounted to $2.46 billion relative to a profit before taxation of $543.69 million in 2018.
Following taxation of $744.18 million (2018: $180.45 million), the Company reported net profit of $1.72 billion, relative to the profit of $363.24 million booked in 2018. Net profit for the quarter amounted to $287.53 million, 57% above the $182.68 million for the corresponding quarter of 2018.
Earnings per Share (EPS) for the fourth quarter totalled $0.35 relative to $0.22 in 2018. EPS for the year amounted to $2.08 compared to $0.44 recorded for the prior year. The number of shares used in our calculations amounted to 825,003,263 units. BIL stock price closed the trading period on November 14, 2019 at $70.36.
BIL noted, “we remain positive in our outlook respecting the emerging opportunities we see in the local and international investment landscapes to further diversify and grow our revenue base. We will focus over the next several quarters on optimally deploying the capital raised throughout the FY 2019 year, sustainable growing all core revenue lines, and the continued adoption of best practice risk management and governance throughout our Group.”
Balance Sheet at a glance:
As at September 30, 2019, total assets amounted $41.23 billion (2018: $18.88 billion), a $22.34 billion improvement as a result of the growth in “Marketable Securities” which increased by 314% to a total of $13.63 billion (2018: $3.29 billion). Securities purchased under resale agreements posted a 143% increase to $9.57 billion (2018: $3.94 billion). Pledged assets also contributed to the increase in the asset base with a 21% increase to close at $11.92 billion (2018: $9.88 billion).
Shareholders’ Equity amounted to $13.57 billion relative to $3.07 billion in 2018 resulting in a book value per share of $16.45 relative to $3.72 in 2018.
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